Chlamydiae, bacterial obligate intracellular pathogens, are the etiologic agents of several human diseases. A large part of the chlamydial intracellular survival strategy involves the formation of a unique organelle called the inclusion that provides a protected site within which they replicate. The chlamydial inclusion is effectively isolated from endocytic pathways but is fusogenic with a subset of exocytic vesicles that deliver sphingomyelin from the Golgi apparatus to the plasma membrane. A combination of host and parasite functions contribute to the biogenesis of this compartment. Establishment of the mature inclusion is accompanied by the insertion of multiple chlamydial proteins, suggesting that chlamydiae actively modify the inclusion to define its interactions with the eukaryotic host cell. Despite being sequestered within a membrane-bound vacuole, chlamydiae clearly communicate with and manipulate the host cell from within this privileged intracellular niche.